Ushering in good news for its shareholders,
Wells Fargo & Company
) announced an increase in its share buyback authorization by 200
Moreover, a quarterly common stock dividend of 22 cents per
share, which is scheduled to be paid on December 1, 2012, to
stockholders of record on November 9, 2012, has also been
announced by Wells Fargo.
The boost in share buyback authorization by Wells Fargo, which
has around 5.3 billion shares outstanding, is good news for
shareholders. It comes amid an environment where peer companies
Bank of America Corp.
) have steered clear of such increases in share buybacks while
JPMorgan Chase & Co.
) suspended its temporarily following losses from credit
Having posted profits for the past consecutive quarters, Wells
Fargo's financial strength has been buoyed and it gave the
company the confidence to propose a raise in dividend as well as
boost the level of share buyback activity in 2012 compared to the
Wells Fargo got the nod from the Federal Reserve in March 2012
and as a matter of fact, the clearance of its capital plan in the
stress test this year justified its solid capital position. It
went ahead and boosted its shareholders' wealth by almost
doubling its dividend. Consequently, the advancement in share
buyback authorization further lifted shareholders' confidence in
Notably, Wells Fargo purchased 17 million shares of common stock
in the third quarter. Moreover, it opted for an additional
estimated 9 million shares through a forward repurchase
transaction, which is expected to be settled in the fourth
quarter of 2012.
Earlier in October, Wells Fargo reported its third quarter
earnings results. The company achieved the eleventh
consecutive quarter of growth in earnings per share by reporting
earnings of 88 cents per share in third quarter 2012, beating the
Zacks Consensus Estimate by a penny and comfortably surpassing
earnings per share of 82 cents in the prior quarter and 72 cents
in the year-ago quarter.
Results at Wells Fargo benefited from improvements in
non-interest income as well as cost control measures. The
company experienced decline in non-interest expenses reflecting
positive operating leverage. It also reported $200 million
in reserve release (pre-tax), attributable to improved portfolio
We believe that investors should not be disappointed with their
investments in Wells Fargo over the long term given its diverse
geographic and business mix, which enables it to sustain
consistent earnings growth. Strategic acquisitions will also help
expand Wells Fargo's business and improve profitability. Capital
deployment efforts are encouraging. Yet, tepid economic recovery,
low interest rate environment and regulatory issues remain our
Wells Fargo currently retains a Zacks #3 Rank, which translates
into a short-term Hold rating. Considering its fundamentals, we
also have a long term Neutral recommendation on the stock.
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